Soaring generic drug prices draw Senate scrutiny

Some low-cost generic drugs that have helped restrain health care costs for decades are seeing unexpected price spikes of up to 8,000 percent, prompting a backlash from patients, pharmacists and now Washington lawmakers.

Members of the Senate meet Thursday to scrutinize the recent, unexpected trend among generic medicines, which are copies of branded drugs that have lost patent protection. They usually cost between 30 to 80 percent less than the original medicines.

Experts point to multiple, often unrelated, forces behind the price hikes, including drug ingredient shortages, industry consolidation and production slowdowns due to manufacturing problems. But the lawmakers convening Thursday's hearing, led by Vermont Senator Bernie Sanders, say the federal government needs to do more to bring down prices.

"These companies have seen the opportunity to make a whole lot of money and are seizing that opportunity," said Sanders, who chairs the Senate Subcommittee on Primary Health and Aging.

Sanders is a political independent who usually votes with the liberal wing of the Democratic party. "There is no rational economic reason for prices to go up 1000 percent," he said.

One strategy Sanders favors: requiring generic drugmakers to pay rebates to the federal Medicare and Medicaid drug plan when the prices of their medications outpace inflation. Those payments are already mandatory for branded drugs, but have never applied to generics.

The lower prices of generic drugs make them the first choice for both patients and insurers. Generic drugs account for roughly 85 percent of all medicines dispensed in the U.S., according to IMS Health. Typically, generic drug prices fall as more companies begin offering competing versions of the same drug.

But recent examples suggest the market forces that have kept generic prices low are not working properly.

The average price of albuterol sulfate, a common asthma treatment, shot from $11 per bottle last October to $434 per bottle in April 2014, an increase of over 4,000 percent, according to data from the Healthcare Supply Chain Association cited by the Senate subcommittee.

The price for the antibiotic doxycycline hyclate, used to treat various infections, rose more than 8,280 percent during the same time frame from $20 per 100-pill bottle to $1,849.

John Field of Mt Vernon, Missouri, says he used to be able to buy a month's supply of doxycycline for $4 to treat his Lyme disease, which forced him to stop working as a pipe fitter. The medication now costs $167 per month, a 4,000 percent increase that he is unable to afford.

"Only by the grace of my family was I able survive and escape the trap of homelessness," says Field, 50. "My sister has paid for all of my medication."

Last month, Sanders and House Rep. Rep. Elijah Cummings, D-Maryland, sent letters to the makers of 10 generic drugs that have seen price increases of over 300 percent or more in recent months, including doxycycline.

The Generic Pharmaceutical Association says the ten drugs cited by lawmakers do not reflect the broader U.S. market, which includes 12,000 generic medications that have reduced drug costs by billions. The group also points to data suggesting generic drug prices have been cut in half since 2008, according to pharmacy benefit provider Express Scripts.

The letters from Sanders and Cummings follow requests for congressional hearings by the National Community Pharmacists Association, which says independent pharmacies are being squeezed by the price hikes. In some cases, pharmacists are losing money on drugs that are purchased at new sky-high prices but are still reimbursed at the older, lower rates by pharmacy benefit companies.

"Community pharmacies are put in the untenable position of having to absorb the difference between the large sums of money that they spent to acquire the drugs and the lower amounts that they are paid," states pharmacist Rob Frankil, in prepared testimony obtained by the Associated Press.

Frankil is scheduled to testify Thursday on behalf of the pharmacist group, along with generic industry executives and academics, including Dr. Aaron Kesselheim of Harvard Medical School.

Kesselheim will recommend that federal officials be notified of all drug price increases greater than 100 percent, according to written testimony. In previous cases where drug shortages have led to price spikes, the Food and Drug Administration has approved emergency imports of extra supplies from foreign sources.

Kesselheim also says more funding is needed for the Federal Trade Commission, which has responsibility for policing anticompetitive tactics among companies, including generic drugmakers.